NOTE: Numbers and calculations are not self-explanatory. There should be a written introduction (1 paragraph) aside from solving the problems (Graphs, charts and equations can be used to demonstrate the solution). Conclusions must be supported as well. Should be done in a word document or excel spreadsheet.

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Chapter 4: Problem 6

Let's begin by recalling what elasticity is. Elasticity measures the responsiveness to price changes. A high elasticity means that suppliers are responsive to price changes (that is, if price drops, a lot of suppliers will stop making the product, and if price increases, a lot of suppliers will start making this product). A low elasticity, on the other hand, means that suppliers are less responsive to price changes.